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China's changing energy intensity trend: A decomposition analysis

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  • Ma, Chunbo
  • Stern, David I.

Abstract

China experienced a dramatic decline in energy intensity from the onset of economic reform in the late 1970s until 2000, but since then the rate of decline slowed and energy intensity actually increased in 2003. Most previous studies found that most of the decline was due to technological change, but disagreed on the role of structural change. To the best of our knowledge, no decomposition study has investigated the role of inter-fuel substitution in the decline in energy intensity or the causes of the rise in energy intensity since 2000. In this paper, we use logarithmic mean Divisia index (LMDI) techniques to decompose changes in energy intensity in the period 1980-2003. We find that: (1) technological change is confirmed as the dominant contributor to the decline in energy intensity; (2) structural change at the industry and sector (sub-industry) level actually increased energy intensity over the period of 1980-2003, although the structural change at the industry level was very different in the 1980s and in the post-1990 period; (3) structural change involving shifts of production between sub-sectors, however, decreased overall energy intensity; (4) the increase in energy intensity since 2000 is explained by negative technological progress; (5) inter-fuel substitution is found to contribute little to the changes in energy intensity.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 30 (2008)
Issue (Month): 3 (May)
Pages: 1037-1053

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Handle: RePEc:eee:eneeco:v:30:y:2008:i:3:p:1037-1053

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  1. Fisher-Vanden, Karen & Jefferson, Gary H. & Liu, Hongmei & Tao, Quan, 2004. "What is driving China's decline in energy intensity?," Resource and Energy Economics, Elsevier, vol. 26(1), pages 77-97, March.
  2. Cleveland, Cutler J. & Kaufmann, Robert K. & Stern, David I., 2000. "Aggregation and the role of energy in the economy," Ecological Economics, Elsevier, vol. 32(2), pages 301-317, February.
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Cited by:
  1. Huang, Yuanxi & Todd, Daniel, 2010. "The energy implications of Chinese regional disparities," Energy Policy, Elsevier, vol. 38(11), pages 7531-7538, November.
  2. Lescaroux, François, 2008. "Decomposition of US manufacturing energy intensity and elasticities of components with respect to energy prices," Energy Economics, Elsevier, vol. 30(3), pages 1068-1080, May.
  3. Chai, Jian & Guo, Ju-E & Wang, Shou-Yang & Lai, Kin Keung, 2009. "Why does energy intensity fluctuate in China?," Energy Policy, Elsevier, vol. 37(12), pages 5717-5731, December.
  4. de Freitas, Luciano Charlita & Kaneko, Shinji, 2011. "Decomposing the decoupling of CO2 emissions and economic growth in Brazil," Ecological Economics, Elsevier, vol. 70(8), pages 1459-1469, June.
  5. Silveria, Fernando Castellanos & Luken, Ralph A., 2008. "Global overview of industrial energy intensity," Energy Policy, Elsevier, vol. 36(7), pages 2658-2664, July.
  6. Chu Wei & Man-hong Shen, 2009. "What is the driving force of the energy productivity? Evidence from China," Frontiers of Economics in China, Springer, vol. 4(2), pages 265-273, June.
  7. Åsa Löfgren & Adrian Muller, 2010. "Swedish CO 2 Emissions 1993–2006: An Application of Decomposition Analysis and Some Methodological Insights," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 47(2), pages 221-239, October.
  8. Zheng, Yingmei & Qi, Jianhong & Chen, Xiaoliang, 2011. "The effect of increasing exports on industrial energy intensity in China," Energy Policy, Elsevier, vol. 39(5), pages 2688-2698, May.
  9. Schön, Lennart & Kander, Astrid, 2007. "Industrial dynamics and innovative pressure on energy - Sweden with European and Global outlooks," CIRCLE Electronic Working Papers 2007/5, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
  10. Mulder, Peter & de Groot, Henri L.F., 2012. "Structural change and convergence of energy intensity across OECD countries, 1970–2005," Energy Economics, Elsevier, vol. 34(6), pages 1910-1921.
  11. Sorrell, Steve & Lehtonen, Markku & Stapleton, Lee & Pujol, Javier & Champion, Toby, 2009. "Decomposing road freight energy use in the United Kingdom," Energy Policy, Elsevier, vol. 37(8), pages 3115-3129, August.
  12. Ma, Hengyun & Oxley, Les & Gibson, John, 2009. "Gradual reforms and the emergence of energy market in China: Evidence from tests for convergence of energy prices," Energy Policy, Elsevier, vol. 37(11), pages 4834-4850, November.
  13. Yuxiang, Karl & Chen, Zhongchang, 2010. "Government expenditure and energy intensity in China," Energy Policy, Elsevier, vol. 38(2), pages 691-694, February.
  14. Zhao, Xiaoli & Ma, Chunbo & Hong, Dongyue, 2010. "Why did China's energy intensity increase during 1998-2006: Decomposition and policy analysis," Energy Policy, Elsevier, vol. 38(3), pages 1379-1388, March.
  15. David I. Stern, 2010. "The Role of Energy in Economic Growth," CCEP Working Papers 0310, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  16. Liu, Hongtao & Xi, Youmin & Guo, Ju'e & Li, Xia, 2010. "Energy embodied in the international trade of China: An energy input-output analysis," Energy Policy, Elsevier, vol. 38(8), pages 3957-3964, August.
  17. Arbex, Marcelo & Perobelli, Fernando S., 2010. "Solow meets Leontief: Economic growth and energy consumption," Energy Economics, Elsevier, vol. 32(1), pages 43-53, January.
  18. Xia, X.H. & Huang, G.T. & Chen, G.Q. & Zhang, Bo & Chen, Z.M. & Yang, Q., 2011. "Energy security, efficiency and carbon emission of Chinese industry," Energy Policy, Elsevier, vol. 39(6), pages 3520-3528, June.
  19. Feng, Taiwen & Sun, Linyan & Zhang, Ying, 2009. "The relationship between energy consumption structure, economic structure and energy intensity in China," Energy Policy, Elsevier, vol. 37(12), pages 5475-5483, December.
  20. Wang, Wenchao & Mu, Hailin & Kang, Xudong & Song, Rongchen & Ning, Yadong, 2010. "Changes in industrial electricity consumption in china from 1998 to 2007," Energy Policy, Elsevier, vol. 38(7), pages 3684-3690, July.
  21. Yang, Mian & Yang, Fu-Xia & Chen, Xing-Peng, 2011. "Effects of substituting energy with capital on China's aggregated energy and environmental efficiency," Energy Policy, Elsevier, vol. 39(10), pages 6065-6072, October.
  22. Ma, Hengyun & Oxley, Les & Gibson, John, 2009. "Substitution possibilities and determinants of energy intensity for China," Energy Policy, Elsevier, vol. 37(5), pages 1793-1804, May.
  23. Zhang, Xing-Ping & Cheng, Xiao-Mei & Yuan, Jia-Hai & Gao, Xiao-Jun, 2011. "Total-factor energy efficiency in developing countries," Energy Policy, Elsevier, vol. 39(2), pages 644-650, February.

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